All Things Money: Fashion... Way More Than Meets Your Style
Striking a pose is more than wearing stylish clothes... Here's how a multi-trillion industry trades luxury & fast fashion trends globally to fit your wardrobe.
The global fashion industry is big business.
From designing trendy styles to manufacturing and distributing products worldwide, fashion generates hundreds of billions in annual revenue.
But how exactly does this multifaceted industry work? And what economic impact does fashion have in the economy?
This article will explore the global supply chain that fuels the fashion industry, contrast luxury versus fast fashion business models, and highlight fashion's footprint on the US and global economies through trade, jobs, and tax dollars.
How Does the Fashion Industry Work?
The fashion industry revolves around design at its core.
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- Creative design teams envision upcoming seasonal trends and styles.
They draw inspiration from cultural movements, celebrity influence, and shoppers' buying data. - Their sketches and prototypes then enter the manufacturing phase.
- Mass manufacturing primarily occurs in developing nations with lower labor costs, like China, India, Bangladesh, and Vietnam.
Here, textiles are produced, and garments are assembled by the millions in large factories. - The extensive global supply chains allow brands to produce high volumes of clothing at competitive prices.
- Once manufactured, products enter the global trading marketplace.
Brands distribute their goods to wholesale partners and retailers around the world. - Shipping containers full of the latest trends set sail from Asian ports en route to Western markets.
- International air cargo routes expedite luxury fashion to high-end boutiques and department stores.
- At the retail level, clothing is displayed on racks, folded neatly on shelves, or modeled on mannequins to entice shoppers.
- Stores market brands through advertising, social media, and eye-catching window displays.
- Customers then purchase garments through either brick-and-mortar shopping or e-commerce websites.
- After the primary retail season ends, excess inventory flows to outlet stores and discount retailers. Here, last season's stock is cleared to accommodate new items.
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Savvy consumers hunt for high-quality deal wear, while brands recoup some profits on otherwise obsolete merchandise.
The Economic Impact of Dressing with Style
The sheer scale of the fashion industry is immense.
The global apparel and footwear industry market size was valued at $1.71 trillion dollars in 2021, according to Euromonitor, with a total growth of 18% from 2020.
While China was credited with the biggest market size valued at $427 B (and 18% of the World's population), the US was the 2nd biggest market with $364 B, representing 46% of the apparel industry.
Significant players like Nike, H&M, and LVMH generate multi-billion dollar revenues yearly.
In terms of jobs, over 75 million people globally are employed directly or indirectly in fashion-related work like design, manufacturing, retail, and media, according to the World Trade Organization.
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